Accessibility links

Vietnam's WTO Hopes Slipping Away


As most of the World Trade Organization focuses on the troubled talks aimed at giving new export opportunities for some of the world's poorest countries, another country is seeing its opportunity to join the WTO this year slip away. Vietnam is learning that latecomers to the world trading club are finding it harder and harder to gain entry.

Vietnam had hoped to enter the World Trade Organization at the ministerial meeting in December in Hong Kong. But recently, Hanoi has had to admit that it will not meet that self-imposed deadline and hopes now to join sometime in 2006.

Vietnam has not yet completed the required bilateral negotiations with several WTO members, including the United States, Australia and New Zealand. Many assume there is one set of criteria for joining the WTO, but that is not true. Each new member joins with a different accession package, a series of agreements that must be negotiated with each existing member.

And over the past few years, joining the WTO has gotten harder.

Countries that joined in the late 1990s had relatively easy accession packages. But these days, prospective members are being asked to quickly open up their domestic markets to foreign competition, slash import tariffs below the rates of existing members and to end agriculture subsidies almost immediately.

The issue of farming subsidies is particularly annoying to Pham Chi Lan, an economic adviser to the Vietnamese government, who says developed countries are being hypocritical.

"Both the U.S. and the E.U. and a number of developed countries have big subsidies to agriculture but they still insist to ask developing countries, including Vietnam, to open the markets," said Pham Chi Lan. "In Vietnam, we have very small subsidies to agriculture. It's unfair, really unfair in that way."

It is true that those arriving late to the WTO party are finding the cost of entry higher. Vietnam's ambassador dealing with the WTO recently said that the United States, in particular, is driving hard bargains. But there is a reason for the new tough stance.

After China entered the WTO in 2001, it began to dominate world markets in many industries, such as textiles. Developed countries complain that China has not lived up to the promises it made to open up its own markets. Adam Sitkoff, director of the American Chamber of Commerce in Hanoi, says that experience has made the United States wary.

"The United States Congress isn't prepared to let another China-like agreement come into force in terms of WTO," said Adam Sitkoff. "WTO is a club, and it's a club that gets harder and harder to get into over time. Vietnam has chosen its own timeline to get in and Vietnam knows that China has raised the bar of Vietnam's WTO accession. Not the United States, not the New Zealanders. It's been China that's raised the bar on Vietnam."

However, Mr. Sitkoff and other trade experts note that Vietnam has a hefty trade surplus with the United States, which also may cause Washington to be demanding in the WTO talks.

Vietnam exports more than $5 billion worth of goods to the United States annually, while U.S. exports to Vietnam amount to just over $1 billion. Hanoi expects to have a global trade deficit of more than $6 billion.

Vietnamese negotiators say it is unfair to hold them responsible for China's trading sins, but they may find they have no choice but to give in to the new, stricter demands to join the WTO.

Some aid agencies, such as the British group Oxfam, say developing countries that rely heavily on agriculture, such as Vietnam, are faced with tough WTO deals that put impoverished farmers at a disadvantage. They also confront tough requirements to open other industries, such as banking, to competition from sophisticated multinational giants.

As long as it remains outside the trade club, Vietnam cannot take advantage of dropping tariffs on textiles, one of its main industries, and also will be left out of whatever agreement eventually comes from the Doha Round, which is aimed at helping developing nations getting greater access to the world's markets.

Political analyst and Vietnam expert Carl Thayer, who teaches at the Australian Defense Academy, says Hanoi really has no choice.

"If it's left behind, conditions are only going to get worse. It's like it should have competed in the Olympics one year, [because] you wait another four years, there will be even better players and the times will be harder to beat," noted Carl Thayer. "So the longer they stay on the outside the harder it is going be for them to come up to that standard."

If it wants to gain entry by next year, trade experts say Vietnam eventually may have to decide whether a bad deal to join the WTO is better than no deal at all.

XS
SM
MD
LG